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The FCA (Financial Conduct Authority) announces they have fined Moneybarn £2.77 million for unfair treatment of customers in arrears!

By Jamie Scott

Moneybarn Ltd (Moneybarn)

Moneybarn Ltd (Moneybarn) has today been issued with a fine of £2.77 million by the Financial Conduct Authority (FCA) for the unfair treatment of customers who were in financial difficulty and had fell behind in their payments between the period of April 1st 2014 and October 4th 2017.

Moneybarn has voluntarily made more than £30 million available to all 5933 customers who they believe may have been affected by these failings.

The FCA have reported Moneybarn have willingly agreed to make said money available without requiring customers to demonstrate that they have suffered any financial detriment.

It is reported that Moneybarn failed to outline the financial consequences to customers, when unable to keep up, in a way that was clear, fair and not misleading. Almost 15,000 Moneybarn customers, many of whom were vulnerable defaulted after entering into short term repayment plans.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: 

“Moneybarn did not give its customers, many of whom were vulnerable, the chance to clear their arrears over a realistic and sustainable period. 

‘It also did not communicate clearly to customers, in financial difficulty, their options for exiting their loans and the associated financial implications, resulting in many incurring higher termination costs. These were serious breaches.

’After discussions with the FCA, Moneybarn voluntarily paid more than £30 million in redress to customers potentially affected by its failings. The FCA gave Moneybarn significant credit for this in assessing the size of the penalty imposed.’

Who are Moneybarn?

Moneybarn are a FTSE 250 company and a subsidary of Provident Financial plc. Moneybarn mainly provides motor finance to customers who would be otherwise unable to access a finance deal from other mainstream lenders due to their personal circumstances. The majority of these agreements are to finance used cars.

These customers are at a higher risk of suffering detriment if they fall into arrears. The majority of these customers are at risk of financial vulnerability as in many cases they have poor or no credit history or previous credit issues due to poor health, periods of unemployment and unexpected/adverse life events.

The FCA had the potential to impose a penalty of almost £4 million however due to Moneybarns willingness to cooperate and agreement upon the FCA’s findings they became able to qualify for a 30% discount in addition to the credit it received for the redress paid to customers.

Notes:

  • The FCA’s press release 
  • Final Notice : Moneybarn Limited (PDF)
  • Customers can contact Moneybarn on 0330 555 1230
  • Between 1 April 2014 and 31 December 2017, the Moneybarn Group entered into 71,254 loans with customers.
  • On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA). 
  • On 1 April 2014, the FCA took over responsibility for regulating consumer credit firms. 
  • The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this, it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers. 
  • For more information contact the FCA press office on 02070663232.

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